Transcript The Great Depression Begins

THE GREAT DEPRESSION
BEGINS
ECONOMIC TROUBLES
Serious problems begin to effect the economy in the 1920’s
 Many Americans could not earn a decent living
 Industry struggles and farmers produced more than they could sell
 Caused consumers and farmers to go into debt
INDUSTRIES IN TROUBLE
Basic industries such as railroads, textiles, and steel no longer making
profit
 New forms of transportation are available
Mining and lumber (needed for WWI) no longer in need
 New electricity sources
Housing industry begins to decline -> jobs go hand in hand with this
idea
FARMERS NEED HELP
Famers planted more and took out loans for equipment during
the heightened demand in WWI
 Crop prices drop by nearly 40%
Tried to increase production to sell more crops
 Could not pay back loans and debt
 Property foreclosed and lost land as repayment
 Rural banks began to go under
 Auctions held to gain back some of the bank’s losses
Congress tries to pass McNary-Haugen bill
 Called for federal price-supports -> government would buy surplus crops at
set price and sell it in the world market
 Bill vetoed twice by President Coolidge; “Farmers have never made money. I
don’t believe we can do much about it.”
LESS MONEY, MORE PROBLEMS
As incomes fell, people not able to buy as much
Also caused by rising prices, stagnant wages, unbalanced distribution
of income, and overbuying on credit
Production expands faster than wages
 Widens gaps between rich and poor
LIVING ON CREDIT/UNEQUAL
DISTRIBUTION OF INCOME
People buy goods on credit
 Buy now pay later concept (usually in installment plans)
 Caused debt and less spending
Rich get richer and poor get poorer
 70% of nations families make $2,500 per year (considered to be minimum amount
for decent living)
 Still this is not able to match rising prices of goods
HERBERT HOOVER
Election of 1928
 Rep. Herbert Hoover vs. Dem. Alfred E. Smith
 Hoover could point to many years of prosperity under Republican administrations
Economists begin to warn about weaknesses in the economy
STOCK MARKET
People begin to invest in the stock market regardless
 Dow Jones Industrial Average used to judge stock market’s health
 Based on stock prices of 30 large firms
Stocks continue to grow through 20’s
 Encourage people to buy more than ever (bull market)
People begin to act on speculation -> they bought stocks and
bonds on the chance of a quick profit
Also begin to buy on margin -> paying a small percentage of
stock’s price as a down payment and borrowing the rest
 Stock prices did not reflect the companies worth and if prices dropped then
people would not be able to pay back loans
STOCK MARKET CRASH
Early September 1929 -> stocks peaked and then fell
 Some people quickly sold and got out
Oct. 24, 1929 -> the market took a plunge
Black Tuesday (Oct. 29th)
 Market takes plunge
 People try to sell before it gets worse
 People stuck with debt and lose their savings
 Quote pg. 469
FINANCIAL COLLAPSE
Stock market crash signaled the start of the Great Depression
 Not the sole cause
Economy plummets and unemployment increases
People begin to withdrawal money from the banks
 Banks had invested some money into stock market
 Not insured by the government
WORLDWIDE EPIDEMIC
Much of Europe suffers through the 1920’s as well
 Countries face high war debts from WWI
 Germany had to pay reparations
 Did not import or export as much
Hawley-Smoot Tariff Act
 Established the highest protective tariff ever
 Protect Americans from foreign competition
 Caused other countries to run out of American currency so they could
not buy American goods
 Countries respond by creating their own tariffs and trade drops
40%
CAUSES OF THE GREAT DEPRESSION
Tariffs and war debt policies that cut down the foreign market for
American goods
A crisis in the farm sector
The availability of easy credit
An unequal distribution of income
HARDSHIPS OF THE
DEPRESSION
QUALITY OF LIFE DECREASES
Depression in the cities
 Unemployment
 Eviction (shantytowns aka Hoovervilles)
 “Here were all these people living in old, rusted-out car bodies… There were people living in shacks made of
orange crates. One family with a whole lot of kids were living in a piano box…People were living in whatever
they could junk together”
 Not much food
 Scavenged or soup kitchens/bread lines
 Increase in racism
QUALITY OF LIFE DECREASES
Depression in rural areas
 Still difficult but had some advantages
 Farmers could grow their own food
 Many farmers lost their land (foreclosure)
 Some resort to tenant farming
The Dust Bowl
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Caused by a massive drought
Plowing removes prairie grasses
Wind storm picked up loose soil
Kansas, Oklahoma, Texas, New Mexico, and Colorado affected the most
Causes people to begin to move West
FAMILY LIFE
Men had hard time finding employment
 Would walk streets to find work
 Hoboes are men who give up and abandon their families
Women did what they could
 Canned food, sewed clothes, etc.
 Some worked but not acceptable to many
Children are affected by poor diets and health problems
 School years become shorter
 Many children “run away” to escape poverty
SOCIAL AND MENTAL AFFECTS
People begin to lose will to survive
 Suicide rate rose more than 30%
 Admissions to mental hospitals rose
Had to make life-changing sacrifices
 Stopped going to doctors
 Gave up collegiate dreams
Acts of kindness were not rare
 Gave food, clothing, and place to stay to needy
HOOVER AND THE DEPRESSION
FINGERS CROSSED
After stock market crash, Hoover tries to reassure nation that the economy was
ok
 Wanted Americans to go about their usual business
 People believe this is a natural cycle
Hoover feels government is a mediator between businesses and laborers
Hoover opposes any form of federal welfare
 Americans feel that people should succeed through their own efforts (not depend on gov’t to
bail them out)
Hoover calls together the nation’s top business, banking, and labor people
 Employers should not cut wages or lay off workers
 Laborers should not ask for higher wages or go on strike
Year after stock market crash -> economy still shrinking and unemployment
still rising
BOULDER DAM
A project that Hoover approved to help out the economy.
 Would fund the project with the electricity the dam would produce
 Would be the tallest and second largest dam up to its time period
 Provided jobs, water supply, electricity, etc.
CONGRESSIONAL ELECTIONS
Democrats take advantage of Hoover’s mistakes and gain more seats
in Congress
 Republicans lose majority in H.O.R. and only have majority by 1 vote in the Senate
People begin to show disapproval of Hoover
 Farmers burn crops instead of sell it at a loss
 Roads were blocked to push for food shortages
 Hoovervilles, Hoover blankets, Hoover flags
Hoover still holds to his ideals
 No direct relief or federal welfare
HOOVER’S RESPONSE
Hoover finally softens his principles
 Backed creation of the Federal Farm Board
 Raise crops prices by helping members to buy crops and keep them off the market temporarily until prices rose
 National Credit Cooperation -> loaned money to smaller banks to help them avoid bankruptcy
Election coming up and Hoover begins to sweat it
 Pass measures to reform banking, provide mortgage relief, and put more federal money into
business investment
 Federal Home Loan Bank Act -> lowered mortgage rates for homeowners and let farmers refinance their farm
 Reconstruction Finance Corporation -> emergency financing for banks, life insurance companies,
railroads, and other business
 Poor citizens could not wait for the money to “trickle” down
THE BONUS ARMY
1932 -> 20k + WWI veterans arrive in Washington D.C.
 Called themselves the Bonus Army
 Supporting a bill in Congress; The Patman Bill
 Authorized the gov’t to pay a bonus to WWI veterans who had not been compensated adequately for their
service
 Bill was not passed – many people left- some did not
 Hoover calls in 1,000 soldiers under General Douglas MacArthur and Major Dwight
D. Eisenhower
 Troops gas the crowd and kill/injure 1k +